Overview

A newly formed business incorporated in Dubai has, in conjunction with a niche artist, created and designed a number of digital art collectibles on the Ethereum blockchain, generated from a collection of original traits using a traditional art technique.

The client was referred by another professional firm – specialising in the NFT sector – familiar with Jason’s intellectual property expertise and his commercial contract, software and – in this instance, relevant NFT project experience.

As an innovative NFT project developing these particular digital collectables, in a relatively new market sector, the client required specialist guidance including:

comprehensive tax and jurisdictional advice;
detailed understanding of regulation;
specialist documentation in compliance with relevant regulation; and
bespoke agreements to – amongst other things – secure and protect intellectual property rights, revenue and royalties, moral rights, confidentiality, and restrictive covenants.

The client needed a highly accomplished, professional lawyer with an exceptional portfolio of business and legal skills, relevant experience within the NFT sector, and a deep, comprehensive understanding of intellectual property and commercial matters.

Another essential requirement was an exceedingly responsive, pragmatic approach, one that would enable the client’s new business to operate within minimum regulatory requirements.

Approach

Of paramount importance, was a full understanding of the client’s main objectives, whilst remaining cognisant of the client’s preferred outcome(s) and deadlines.

Matters arising in connection with preferred legal and tax-efficient jurisdiction required a tactical and comprehensive assessment, before a successful course of action was agreed upon.

An appreciation of the nature and scope of the background intellectual property was essential, along with various ownership and licensing issues, in order to ensure clear use and to maximise revenue.

Once suitable jurisdictions were identified, bespoke documentation was deftly designed and drafted in support of the project.

Challenges

There were significant challenges to overcome in the designing, drafting and production of the client’s bespoke NFT agreements, including:

assessing the project particulars with regards to tax, jurisdiction and regulatory requirements;
balancing the aims of the project with minimal regulatory compliance and tax exposure;
ensuring the intellectual property rights were assigned without conflict or otherwise encumbered (eg: by the artist’s moral rights);
producing suitable regulatory documentation to ensure compliance and lawful marketing and sales of its NFTs.

Solution

Following the successful conclusion of the project, the client was able to:

assess appropriate legal and tax jurisdictions that would affect the project;
obtain legal documentation to support its Smart contract;
secure the necessary intellectual property rights in advance of the NFT Drop; and
obtain a suite of legal documents enabling it to promote and sell the NFTs.

Remember…

I understand the critical law plays in understanding and navigating this landscape successfully and have:

extensive experience working alongside both new and established businesses
supported organisations operating within new market sectors and/or innovative technology, and
thorough knowledge of intellectual property, software and commercial matters.

Currently, I am supporting a number of clients within the NFT sector in particular. In this instance, I was a direct referral from another lawyer – also specialising in this sector – who valued my specialist advice in connection with this client and their intended NFT drop.

Use an experienced and qualified lawyer to advise you in connection with jurisdiction, regulatory, and intellectual property rights as early as possible;
Use an experienced advisor in connection with taxation as early as possible;
Consider risks to your business and not only appreciate what could go wrong, but how to avoid or mitigate against possible situations;
Consider appropriate registration of intellectual property rights;
Poor and ineffective commercial contracts will adversely affect your business, and in particular ownership of intellectual property, licensing rights, and revenue opportunities;
Suitable and comprehensive IP and contract advice will enable you to quickly and effectively manage potential disputes, enhance your profitability with less distraction to your business, as well helping you to reduce future costs and risk.